Court File and Parties
COURT FILE NO.: CV-20-00002435-0000 DATE: 2021-04-23 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Inderpal Grewal & Baljit Grewal, Plaintiff AND: Gurpreet Dhalilwal also known as Gurpreet Kaur Ahluwalia and Rana Ahluwalia, Defendants
BEFORE: Kurz J.
COUNSEL: Rida Anmol for the Plaintiff Gurpreet Dhaliwal (Self-represented) for the Defendant
HEARD: April 14, 2021
ENDORSEMENT
Introduction
[1] The Plaintiffs move for:
- an interim Order for the preservation of the proceeds of sale of approximately $1,420,100.00 from 19 Rhapsody Crescent, Brampton, Ontario (“19 Rhapsody”),
- an interim Order, requiring the Defendants Rana Ahluwalia (“Rana”) and Gurpreet Ahluwalia (“Gurpreet”) to account for assets disposed of by the Defendants since July 2020, including the Proceeds of Sale of the Property.
- interim and interlocutory Orders compelling the Defendants to provide the Plaintiffs with a sworn statement describing the nature, value, and location of assets owned in Canada and worldwide and to provide notice to the Plaintiffs in the event of further sales or transfers of their assets and the Proceeds of Sale.
[2] This is the second of two actions commenced by the Plaintiffs against Rana for the same set of loans. In 2019, they sued Rana and two corporations for $250,000 in damages and $100,000 in punitive damages (“the 2019 Action”). The corporate defendants in the 2019 actions are Desai Beats Media Corp. (“Desai”), a corporation that the Plaintiffs claim that Rana controls, and EF4U Group Inc. o/a Universal Mortgages (“U Mortgages”), a corporation with which Rana was associated as an agent.
[3] The Plaintiffs’ claim against Rana and Desai in the 2019 Action was in deceit, breach of fiduciary duty, breach of trust, and unjust enrichment, “knowing assistance with a breach of trust, negligence and breach of contract”. The Plaintiffs’ sought orders that they are the owners of property owned by Rana and his co-defendants, and an interim and permanent order restraining the defendants in that action “from disposing of, dissipating or removing their assets from Ontario”. In essence they claimed that U Mortgages was vicariously liable for Rana’s actions.
[4] The Plaintiffs then brought this second action against Rana; this time including his former wife, Gurpreet. This claim is based on constructive or resulting trust with regard to one specific property: 19 Rhapsody Crescent, Brampton (“19 Rhapsody”). The Plaintiffs allege in this action that Rana used some or all of the $250,000 in loan advances that are the subject of the 2019 action to help pay for 19 Rhapsody. They add that Rana, along with Gurpreet, whom they pleaded is still his wife, arranged his finances so that the borrowed funds are incapable of collection.
[5] In this action, the Plaintiffs seek a declaration that they are the beneficial owners of 19 Rhapsody, pursuant to a constructive or resulting trust, and that they are entitled to the proceeds of its sale some nine months ago, on July 13, 2020.
[6] As Gurpreet points out, at all material times, title to 19 Rhapsody was registered solely in her name. She purchased it using, in part, the proceeds of sale of her former home, 110 Herdwick Street, Brampton (“110 Herdwick”). That property too was registered solely in her name. While the Plaintiffs assert that Gurpreet may have placed some of the $250,000 in loans towards 110 Herdwick, they offer no real evidence in support of that claim.
Rana’s Failure to Participate in this Motion
[7] Rana neither attended the argument of this motion nor filed any materials for it. The Plaintiffs have recently noted him in default. While Rana was served with the materials for this motion, he was not originally provided with the Zoom details.
[8] At my request, Ms. Anmol, counsel for the Plaintiffs, sent him an email over the lunch break on the day the motion was argued, with the Zoom details for this motion. I did not start the hearing of the substantive portion of this motion until after the lunch break. Rana responded to Ms. Amnol’s email at 3:12 p.m. that afternoon with an email, containing no content, which simply said:
Warm Regards, Rana Ahluwalia CEO Rana Ahluwalia Productions 2907 Derry Road, Mississauga, Ontario. Canada. L4T 1A6 Ph : +1 416 737 1313
[9] I have instructed Ms. Anmol to file an affidavit of service, confirming that she sent the Zoom details of this motion to Mr. Ahluwalia, at my request, and attaching his email response, above.
Representation of the Late Plaintiff, Baljit Grewal
[10] A second preliminary issue is that of the recent death of the Plaintiff, Baljit Grewal (“Baljit”). The other Plaintiff, Inderpal Grewal (“Inderpal”) is Baljit’s brother. The issue of representation for Baljit’s estate can be resolved for the purposes of this motion by reference to r. 10.02, which reads as follows:
REPRESENTATION OF A DECEASED PERSON
10.02 Where it appears to a judge that the estate of a deceased person has an interest in a matter in question in the proceeding and there is no executor or administrator of the estate, the judge may order that the proceeding continue in the absence of a person representing the estate of the deceased person or may by order appoint a person to represent the estate for the purposes of the proceeding, and an order in the proceeding binds the estate of the deceased person, subject to rule 10.03, as if the executor or administrator of the estate of that person had been a party to the proceeding.
[11] Inderpal requests that he be granted leave under r. 10.02 to represent the interests of the estate of his late brother for the purposes of this motion. Ms. Anmol informed me that Baljit died intestate. He left behind a son, who is an adult. That son may wish to be appointed as an estate trustee for his late father’s estate. However, Inderpal did not wish to delay the motion. Accordingly, I appoint Inderpal to represent the interests of the estate of Baljit for the purposes of this motion only.
Evidence from Counsel, Ms. Anmol
[12] I raised another issue with Ms. Anmol, which is her client’s use of evidence in this motion that indirectly comes from Ms. Amnol herself. That evidence comes in the form of Inderpal’s affidavit, in which he refers to and relies upon the truth of information communicated to him by Ms. Anmol. The use of such evidence, which makes Ms. Anmol both counsel and witness, violates a long-standing rule of evidence in Ontario. I summarized that rule in Harbouredge Commercial Finance Corp. v. Jet Express Transportation Group Ltd., 2020 ONSC 3794, as follows:
12 Over 45 years ago, in Imperial Oil v. Grabarchuk, 1974 869, [1974] O.J. No. 1911 (Ont. C.A.), the Ontario Court of Appeal pointed out: "the impropriety of counsel who had been a witness in the proceedings appearing as counsel on the appeal. This is a well-settled rule which the Court has strictly enforced over the years."
13 This comment has long been understood to mean that one generally cannot be both counsel and witness in the same proceeding. A corollary to that rule is that counsel cannot avoid the rule through the backdoor manoeuvre of having a lawyer's staff member swear a "knowledge and belief" affidavit, offering substantive evidence, based on the lawyer's statements. These points are well summarized by Perell J. in Gutierrez v. The Watchtower Bible and Tract Society of Canada et al., 2019 ONSC 3069, at para. 37, as follows:
The case law reveals that it is improper for the deponent of an affidavit to act as counsel and rely on his or her affidavit. An advocate cannot avoid the rule that he or she cannot be a witness and advocate through the device of having someone else swear the affidavit based on information and belief from the lawyer. It is improper for a lawyer to appear as advocate on a matter where the lawyer is the source of the information concerning an important and contentious matter before the court, even where the lawyer is not the deponent of the affidavit. [References omitted]
14 Perell J. explains the rule as follows:
39 The case law explains that an advocate cannot be a substantive witness in his or her client's litigation because as an advocate, he or she has a duty to the administration of justice to be objective and detached from the client's litigation, which duty could conflict with the advocate's duty to present the client's case in as favorable a light as possible.
[13] Ms. Anmol has advised the court that her client will not rely on her indirect evidence in this motion.
Test for the Relief Sought by the Plaintiffs
[14] The authority to grant an interlocutory injunction is found in r. 40 of the Rules of Civil Procedure and section 101 of the Courts of Justice Act. An interim order for preservation of property is governed by r. 45. of the Rules of Civil Procedure.
[15] The three-part test for the granting of an interlocutory injunction was laid out by the Supreme Court of Canada in RJR – MacDonald Inc. v. Canada (Attorney General), 1995 64 (SCC), 1994 SCC 117, [1995] 3 SCR 199. The moving party must prove that:
a. It raises a strong prima facie case; b. It would suffer irreparable harm if the injunction were not granted; and c. The balance of convenience favours the moving party.
[16] The provision allowing for an interim preservation order is found in r 45.01, which reads as follows:
INTERIM ORDER FOR PRESERVATION OR SALE
45.01 (1) The court may make an interim order for the custody or preservation of any property in question in a proceeding or relevant to an issue in a proceeding, and for that purpose may authorize entry on or into any property in the possession of a party or of a person not a party.
[17] The test for a preservation order was set out by Charney J., writing for the Divisional Court in BMW Canada Inc. v. Autoport Ltd., 2019 ONSC 4299 :
53 In my view, the test under Rule 45.01 should track more closely the actual wording of Rule 45.01, and I would restate the test as follows:
a. the property sought to be preserved is the property in question in a proceeding or relevant to an issue in the proceeding; b. there is a serious issue to be tried with regard to the property; c. the interim preservation or custody of the property is necessary to enable a party to advance or defend its claim; and d. the balance of convenience favours granting the relief sought by the applicant or moving party.
[18] Under r. 41.02, a party may make a claim that a specific fund be “paid into court or otherwise secured on such terms as are just.” The test under that rule is as follows:
(a) the plaintiff claims a right to a specific fund; (b) there is a serious issue to be tried regarding the plaintiff's claim to that fund; (c) the balance of convenience favours granting the relief sought by the plaintiff.
(BMW Canada Inc. v. Autoport Ltd., at para. 50-51, citing News Canada Marketing Inc. v. TD Evergreen, a Division of TD Securities Inc., [2000] O.J. No. 3705 (S.C.), at para. 14. Sadie Moranis Realty Corporation v. 1667038 Ontario Inc., 2012 ONCA 475, at paras. 18 and 19)
Application of the Legal Tests for the Remedies to This Case
[19] In the 2019 action, the Plaintiffs pled that Rana was a mortgage agent who was licenced only to work for U Mortgages, as well as the principal of a media company, Desai. They assert that Rana falsely represented to them that he could offer them various investment opportunities in both media, through Desai, and secured mortgages. Rana represented that the mortgage opportunities would be available through U Mortgages. The Plaintiffs pled that Rana used the business style of “Universal Financials” (“U Financials”) to confuse them into believing that they were dealing with U Mortgages when they forwarded funds towards mortgage loans that they understood Rana to be placing on their behalf. Instead they were forwarded to U Financials, which was simply Rana’s business style.
[20] The Plaintiffs pled in the 2019 Action that they advanced a combined $250,000 in loans towards various media products and mortgage transactions as a consequence of Rana’s misrepresentations, A total of $100,000 went towards U Financials and another $150,000 was provided to Desai. The Plaintiffs pled that, despite numerous requests, those $250,000 in loan advances were never repaid. They further pled that Rana breached various trust obligations towards them by diverting their $250,000 loan advances to his personal use.
[21] There appears to be no question that Rana was a broker who worked with U Mortgages. However U Mortgages denies any affiliation with U Financials, which it pleads to be a business style constructed by Rana alone. It denies any liability for the actions of Rana towards the Plaintiffs, pleading that Rana was simply its independent contractor and not its employee. It pleaded that it had nothing to do with the dealings between Rana and the Plaintiffs.
[22] Rana and Desai filed a brief and superficial statement of defence, offering what can only be described as an ambiguous defence to the claims. Those defences pleaded that the Plaintiffs were advised to obtain independent legal advice, that they deducted a full year’s worth of interest from the mortgage advance, that the advances were never misused, that the Plaintiffs were advised of the status of their funds, and that they approved the use of their funds. What they do not say is that any part of the advances has or will ever be returned or even accounted for.
[23] Discoveries in the 2019 action took place on January 3, 2020. At that time, Rana undertook to provide details and copies of statements from the bank accounts into which the Plaintiffs’ loan advances were deposited. He also undertook to provide an accounting of the use of the funds that the Plaintiffs advanced to Desai and U Financials. He failed to honour those undertakings.
[24] The Plaintiffs argue that this shows that Rana is attempting to hide the money and the trail of those funds. Based on Ms. Anmol’s submissions, I understand that the Plaintiffs have not moved for an order requiring Rana to honour his undertakings, or to strike his pleadings, let alone for summary judgment against Rana and Desai on the loans. I have received no explanation for their failure to do any of the above.
[25] The Plaintiffs point out that they have noted Rana in default in this action. Under r. 19.02 (1)(a), defendant who has been noted in default “is deemed to admit the truth of all allegations of fact made in the statement of claim”. However, it cannot be ignored that Rana has filed a statement of defence in the 2019 action, broadly if not entirely comprehensibly denying the Plaintiff’s allegations. I also note that under the combined effect of r. 19.05((1) and (2) as well as r. 19.06, a plaintiff is not entitled to judgment on a motion for judgment for an unliquidated claim merely because the facts alleged in the statement of claim are deemed to be admitted, unless the facts entitle to Plaintiff to judgment. In other words, the Plaintiff must prove, with evidence, the existence of the facts entitling it to judgment.
[26] Here, the facts that the Plaintiffs relies upon regarding their advances to Rana or entities that he controls are already the subject of the 2019 action. What distinguishes this action from the 2019 action are: 1) the allegations that Rana diverted some or all of the Plaintiffs’ loan advances to 19 Rhapsody and 2) the alleged legal liability of Gurpreet. That being said, the Plaintiffs offer little evidence in this motion in support of both factual assertions. Their main evidentiary support for this motion are Inderpal’s sworn and mainly bald assertions, that Rana:
a. Is the husband of Gurpreet; b. Arranged to have title to 110 Herdwick and 19 Rhapsody registered in Gurpreet’s name, despite his alleged equitable ownership of those properties; c. Once told Inderpal that he required mortgage funds for 110 Herdwick; d. Arranged to have Gurpreet purchase 19 Rhapsody a month after the first advance of $100,000; e. Perpetrated the deeds set out in the 2019 action.
[27] The Plaintiffs also point to problems with Gurpreet’s evidence in that:
a. In the mortgage documentation for 19 Rhapsody, she referred to Rana as her spouse; b. Yet in her statement of defence, again prepared without the benefit of counsel, she denied that she was his spouse or that they have a relationship at all.
[28] All of that being said, there is little evidence, other than Gurpreet’s speculation, that Rana funneled the Plaintiff’s various loan advances to Gurpreet or that she was a party to his alleged breaches of contractual or trust duties towards the Plaintiffs. Nor is there any evidence save Inderpal’s expressed belief, that either their funds or those of Rana went into the purchase price of either 19 Rhapsody or 110 Herdwick. Nor is there evidence that any of the Plaintiff’s funds were used for a mortgage on 110 Herdwick.
[29] In her responding materials, prepared without the assistance of counsel, Gurpreet denies the Plaintiff’s allegations. She states that she and Rana once married and then divorced in 2002. They have two daughters. She produces their 2002 divorce judgment and certificate of divorce.
[30] Gurpreet continues, stating that she and Rana reconciled in 2003. Until 2009, she carried his surname, Ahluwalia. But in 2009, she “started experience problems” [sic] with Rana. As a reflection of their deteriorating relationship, she changed her surname back to her maiden name, Dhaliwal. She does not state that they separated at that time. Rather, she says that Rana stayed with her when he was in town, as he often travelled. She allowed him to do so for the benefit of their daughters.
[31] Gurpreet states that Rana advanced no money for the purchase of 19 Rhapsody or towards 110 Herdwick. The proceeds for the purchase of 19 Rhapsody came from the proceeds of 110 Herdwick. It was simply an error by her conveyancing counsel to label Rana her spouse at the time of the mortgages registered against 19 Rhapsody.
[32] Gurpreet contends that she too was a victim of Rana. She says that when he resided with her at 19 Rhapsody, he “manipulated” her to take out two mortgages (which she calls “liens”), totalling $450,000 plus interest, against that property. He guaranteed the two mortgages, whose proceeds were to go towards another of his film ventures. However, Rana never made payments towards those mortgages, leaving her to pay them from the proceeds of sale of the property.
[33] Gurpreet adds that she no longer owns 19 Rhapsody. After it was sold (on July 13, 2020) Gurpreet says that she was left with “little funds to purchase anything for myself and my kids”. She says that she has been forced to live with her daughters in the basement apartment they continue to occupy. She claims to be unable to even afford counsel in this action.
[34] I have some concerns with the duplication of claims in the 2019 action and this one. First, there is a risk of inconsistent findings based on what is effectively the same set of facts: the $250,000 in loan advances by the Plaintiffs to entities controlled by Rana and the diversion of those funds for his personal use. Further, much of the basis for the Plaintiffs’ claims against Rana in this motion is his failure to answer his undertakings in a different action. But as set out above, the moving parties in this motion, the Plaintiffs, appear not to have moved regarding those undertakings in the proceeding in which they were given. Further they have yet to obtain judgment in that action. Yet they seek remedies in this action, particularly against Rana, which generally are only available after judgment in that one.
[35] On the other hand, Rana has not defended this action or this motion. He is deemed to admit the truth of the allegations in the statement of claim. But that still does not entitle the Plaintiff to judgment on its claims in this action.
[36] Gurpreet stands in a different place to that of Rana in this action. Beyond the inferences that the Plaintiffs attempt to raise from Rana’s on again, off again relationship with Gurpreet, there is no evidence before the court that the funds advanced by the Plaintiff, as pleaded in the 2019 action, were directly or indirectly diverted to 19 Rhapsody. Nor is there evidence that a pool of funds exists from the proceeds of sale of that property; a transaction that closed some nine months ago. Gurpreet denies its existence, pointing to her present, financially challenged circumstances and the need to pay various mortgagees and creditors from the proceeds of sale of 19 Rhapsody. Further, even if Gurpreet were Rana’s wife or common law spouse at all materials times, that fact alone does not entitle the Plaintiffs to the relief that they seek in this motion and action.
[37] During the course of argument, Ms. Amnol stated that if Ms. Dhaliwal agreed to turn over a copy of the trust ledger from her sale of 19 Rhapsody, the Plaintiffs would seek no further relief from her in this motion. Gurpreet agreed to do so.
[38] Accordingly, I order that Gurpreet shall turn over to the Plaintiffs a copy of the trust ledger from her sale of 19 Rhapsody, within 30 days. That consent term of my order is without prejudice to any future position that either party may wish to take in this action, including whether the Plaintiffs are entitled to any further relief from Gurpreet. In addition, I expressly state that the provision of this document is subject to the deemed undertaking rule.
[39] I make no further order and dismiss the balance of this motion as against Gurpreet without costs.
[40] With regard to Rana, even absent his response, I do not find that there is a prima facie case that he directly or indirectly placed any of the Plaintiffs’ funds in 19 Rhapsody. Nor do I find that he received any of the proceeds of sale of 19 Rhapsody. Those are the central premises of this both motion and this action. Of course, my findings above may change after Gurpreet produces the trust ledger from the sale of that property or upon the production of any further evidence.
[41] All of that being the case, the appropriate remedy for Rana’s failure to answer his undertakings in the 2019 action is to be found in that action. Further, the request in this motion is essentially for execution (or at least some of the incidents of the post-judgment collection process) in this action before judgment in either this action or the 2019 action.
[42] Accordingly, I do not find that it is appropriate to grant the relief sought in this motion against Rana. This motion is dismissed as against Rana, without prejudice to the right to seek similar relief with better evidence following judgment against him in this action.
[43] As Rana has not participated in this motion and the Plaintiffs were not successful against him, I will not consider costs in regard to the portion of this motion that dealt with Rana.
“Marvin Kurz J.”
Electronic signature of Justice Marvin Kurz,
Original will be placed in court file
Date: April 23, 2021